CA recently announced the completion of a $375 million enterprise application acquisition. This purchase completes CA's capital allocation "triangle," made up of acquisitions, dividends and share repurchases. For FY2006 (ending March 2006), CA will likely generate $1 billion of cash flow to be allocated to the above acquisition, $100 million paid out in dividends and $600 million of share repurchases.
On top of a renovating accounting systems and settling various legal actions against the company, CA turned in a strong, solid year. To have such capital-generating ability beyond the ordinary demands of a competitive world might cause some investment excitement. Not here. In January 2005, CA was trading at $31 and now trades at $27. What's more, Citigroup, one of the major investment banking firms, just discontinued coverage as a result of an analyst's departure.
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